THE STATE CORPORATION COMMISSION OF THE STATE OF KANSAS Before Commissioners: Thomas E. Wright, Chairman Joseph F. Harkins In the Matter ofa General Investigation to ) Determine the Assessment Rate for the ) Docket No. 10GIMT188GIT Fourteenth Year ofthe Kansas Universal ) Service Fund Effective March 1, 2010 ) ORDER MODIFYING KUSF ASSESSMENT RATE AND ORDER CALCULATING PER LINE KUSF SUPPORT AVAILABLE TO ANY COMPETITIVE ELIGIBLE TELECOMMUNICATIONS CARRIER OPERATING IN A RURAL LOCAL EXCHANGE CARRIER'S STUDY AREA The abovecaptioned matter comes before the State Corporation Commission ofthe State ofkansas (Commission) for consideration and determination. Having examined its files and records and being fully advised in the premises, the Commission finds and concludes as follows: 1. On September 24, 2009, the Commission issued its Order Opening Docket, Assessing Costs, and Establishing Procedural Schedule in this docket. The Commission made all telecommunications public utilities operating in the state parties to the docket and required parties that wanted to receive pleadings and nonfinal orders to enter their appearances. The Citizens' Utility Ratepayer Board (CURB) was made a party to the docket and was not required to file an entry ofappearance. Appearances were entered by Bruce A. Ney on behalfof Southwestern Bell Telephone Company d/b/a AT&T Kansas, AT&T Communications ofthe Southwest, Inc., and TCG Kansas City, Inc., Kenneth Schifman and Diane Browning on behalf of Sprint Communications Company, L.P" Mark Caplinger on behalf ofthe State Independent Alliance, and Thomas E. Gleason, Jr., on behalfofthe Independent Telecommunications Group and H&B Cable Service, Inc.
2. The Kansas Universal Service Fund (KUSF) was established by the Commission pursuant to KS.A. 662008 and began operations March 1, 1997. The Commission annually establishes the rate to be assessed on intrastate retail revenues of all contributors to the fund. Contributors are allowed to pass through the assessment to their customers, limited to the amount ofthe actual assessment. KS.A. 662008(a). The assessment also funds Lifeline service, K.S.A. 662002(f); dual party relay service and telecommunications equipment for persons with visual impairment and persons with other special needs, K.S.A. 662002(g); and KANED support, K.S.A. 662010(f). 3. Sandra Reams prefiled Direct Testimony for Staff on December 23,2009, and on January 11, 2010 filed minor clerical corrections to a chart on page 5 of her direct testimony. No other party filed testimony and the parties agreed to waive the hearing scheduled for January 20, 2010. Staff informed the Commission by motion dated January 12,2010, that the parties had all informed Staff that there was no need for the January 20,2010 technical hearing and requested the Commission issue an order adopting Staffs proposed Year 14 assessment rate of6.06 percent, effective March 1,2010. The Commission issued this order on January 13,2010. 4. On March 10, 2010, in Docket No. 08GIMT 1 023GIT (081023 Docket) the Commission issued an order which reduced CenturyLink's (f/k/a Embarq) intrastate access rates to parity with interstate rates and providing for rebalancing of those reduced rates through the KUSF. In that order, the Commission directed Staff to file a report detailing the actual KUSF support CenturyLink will receive as a result ofthe Commission's order, as well as the impact of that on the KUSF, by May 14,2010. 5. On March 18,2010, Staff filed testimony in this docket recommending that, due to the current financial state ofthe KUSF the Commission cannot wait until the receipt of Staffs 2
May report to revise the KUSF assessment rate. Staff noted in its testimony that various factors in addition to the Commission's decision in the 081023 Docket contributed to the need to revise the KUSF assessment rate upwards sooner rather than later. l Staff recommended that the Commission set the local exchange carrier's (LEC's) per line assessment rate as reflected in Staffs Table 1 at p. 4 of its March 18, 2010 testimony. Under Staff's recommendation, the Rural LEC's per line assessment rate would increase to 1.51, SWBT's per line assessment rate would increase to 2.08, and CenturyLink's per line assessment rate would increase to 1.98. 6. Staff also recommended the Commission increase the KUSF percentage assessment rate to 6.64%, effective June 1,2010, and recommended the Commission do so by Apri116,201O. Doing so by this date, Staff stated, would allow companies time to revise billing systems to accommodate the increase due to the KUSF on July 15,2010. 7. Staff stated that the need for the increase in the KUSF assessment rate was due to the following material changes to the KUSF: a. the KUSF support payable to CenturyLink increased approximately 3.8 million; b. the KUSF support payable to H&B Cable increased approximately 8,400; c. the KUSF support payable to NexTech Wireless increased approximately 82,000; d. the projected Year 13 ending balance, or reserve, declined 1.5 million; e. the contingency fund al10wance increased 400,000; f. the gross KUSF obligations and the adjusted KUSF obligation increased 5.7 million as a result ofthose changes; I See Supplemental Testimony ofsandra K. Reams, filed March 18,2010, p. 2, n. 118. 3
g. the intrastate retail revenue base from which the KUSF monies can be collected dec1ined 17.7 million. 8. Although the Commission did not set dates either for the filing of Staff testimony, or the filing of any reply testimony, Staff has informed the Commission that no party to the docket has indicated it opposes Staffs recommendation and a few entities have inquired of Staff when the Commission's order would be issued so that the revising ofbilling systems and implementation ofthe new percentage rate could begin. 9. On March 31, 2010, Staff filed its report and recommendation calculating the KUSF support available to CETCs operating in an RLEC's study area. In that report, Staff noted that the Commission requires Staff to file the information contained in this report by April 1 of each year. In its report, Staff recommended the Commission adopt the monthly and annual per line KUSF support as reflected in Attachment 1 to its report. For ease ofreference, the Commission attaches Staffs Attachment 1 to this order, as well. Attachment 1 consists of3 pages. Page 1 reflects the per line KUSF support available in each RLEC' s study area, with the exception ofthe JBN, Madison, and Pioneer study areas. Page 2 reflects the per line KUSF support available in each exchange purchased by an RLEC from Century Link, and page 3 reflects the disaggregated per line KUSF support, by exchange and zone, available in JBN, Madison, and Pioneer study areas. 10. The Commission finds that, based upon the evidence presented by Staff in its March 18, 2010 testimony and by its March 31, 2010 report and recommendation, changes should be made to the KUSF, as follows: a. Effective June 1,2010, the KUSF assessment rate shall increase to 6.64%. 4
b. Effective June 1,2010, the RLEC per line assessment rate shall increase from 1.39 to 1.51. c. Effective June 1,2010, SWBT's per line assessment rate shall increase from 1.90 to 2.08. d. Effective June 1,2010, CenturyLink's per line assessment rate shall increase from 1.81 to 1.98. e. Effective March 1,2010, the monthly and annual per line KUSF support available to CETCs in each RLEC study area is adjusted, as provided in attachment 1 to this Order. IT IS, THEREFORE, BY THE COMMISSION ORDERED THAT: A. The findings made in paragraph 10, above, are made the order ofthis Commission as stated in paragraph 10. B. The parties have fifteen days, plus three days if service of this order is by mail, from the date this order was served in which to petition the Commission for reconsideration of any issue or issues decided herein. K.S.A. 66118b; K.S.A. 2009 Supp. 77529(a)(l). D. The Commission retains jurisdiction over the subject matter and parties for the purpose of entering such further orders as it may deem necessary. BY THE COMMISSION IT IS SO ORDERED. CR>EAED MAILED Wright, Chmn.; Harkins, Com. APR 1 3 2010 crh Dated: APR 1 2 20tO Susan K. Duffy Executive Director 5
Per Line KUSF Support in Rural LEC Study Areas Attachment 1 Effective March 1, 2010 Page 1 of3 (Fiscal Year 14) Ma rcb 1, 2010Feb. 28, 2011 Marcb 1, 2009Feb. 28, 2010 Marcb 1, 2008Feb. 28, 2009 Company Montbly Annual Iy Annual Annual Bluestem Blue ValleyOriginal Exchanges 22.21 266.49 11.71 140.51 198.01 (Onaga & Westmoreland) N/A See page 2 See page 2 Columbus 1.88 22.53 1.74 20.88 Council Grove 53.63 643.61 53.47 641.64 56.33 675.98 CrawKan 9.19 110.31 8.90 106.75 10.29 123.51 Cunningham 37.93 455.21 35.17 422.01 37.15 445.79 Elkhart 4.53 54.38 4.38 52.50 6.10 73.20 FairPoint Missouri Golden Belt Gorham (Original Exchanges) 14.85 178.22 17.74 212.90 19.59 235.10 (Luray & Paradise) See page 2 See page 2 See page 2 H&B 07 1,188.80 1,117.29 19 1,130.25 99. 1 93.111 Haviland 94. 1 27.70 332.35 26.53 318.39 27.67 331.99 Home 33.81 405.74 32.60 391.20 34.86 418.35 JBN See Attachment II See Attachment II Sec Attachment II KanOkla 36.521 438.25 35.591 427.09 38. 26 1 459.14 LaHarpe 48.93 587.16 44.52 534.22 54.53 654.30 Madison Sec Attachment II See Attachment II See Attachment II Moundridge 14.10 169.18 14.71 176.49 21.11 253.27 Mutual 51.47 617.60 48.85 586.15 19.68 236.17 Peoples Mutual 13.29 159.44 13.09 157.11 14.43 173.16 Pioneer See Attachment II See Attachment II See Attachment II Rainbow 12. 81 1 153.76 12.481 149.77 16.21 I 194.52 Rural (Original Exchanges Only) 38.70 464.45 36.79 441.43 38.70 464.36 (Purchased Exchanges) See page 2 See page 2 See page 2 S&A 42.59 511.05 40.67 488.01 42.47 509.68 S&T 32.00 383.99 31.28 375.33 33.51 402.08 South Central 17.09 205.09 16.56 198.75 18.85 226.17 Southern Kansas 27.16 325.86 26.07 312.85 26.64 319.65 Sunflower Totah 19.43 233.20 13.09 157.D7 20.81 249.71 TriCounly 47.88 574.61 45.71 548.53 47.44 569.24 Twin Valley AIl (Original) Exchanges 54.22 650.64 52.91 634.89 59.63 715.53 13 Purchased Exchanges N/A N/A See page 2 Telephone Assoc. 1.36 16.30 1.30 15.55 2.12 25.45 Wamego 2.96 35.56 2.86 3436 632 75.89 Wheat State 29.15 349.80 28.25 338.99 30.27 363.27 Wilson 40.90 490.80 38.65 463.81 39.70 476.35 Zenda 50.27 603.19 47.14 565.71 54.25 651.05 4/1212010
Per Line KUSF Support in Rural LEC Excnanges Purchased from CenturyLink, Effective March 1,2010 (Fiscal Year 14) Attachment I Page 2 of3 Gross KUSF Support Per Line Gorham Zone 1 Zone 2 Wire Center Study Area Per Month Annual Per Month ~1Rual Luray Paradise 21.06 252.75 155.55 1,866.60 162.84 1,954.02 Gross KUSF Support Per Line Rural Telephone Zone 1 Zone 2 Wire Center Study Area Per Month Annual Per ]\1UlllU Annual Burr Oak 62.60 751.19 Courtland 196.94 99.58 1,194.93 Downs 24.10 289.25 Esbon Ionia Lebanon Osborne Republic Russell Webber 213.70 82.97 101.87 129.89 49.52 72.39 93.96 995.62 1,222.39 1,558.66 594.21 868.67 1,127.56 Federal USF Offset 16.41 17.81 Study Area Per Month Annual 5.52 66.24 8.41 100.92 Listed KUSF support is reduced by the applicable Federal USF Support Offset 4/12/2010
Cuba (729) Goff (939) Haddam (778) Havensville (948) Mahaska (245) Morrowville (265) Munden (987) Narka (358) Netawaka (933) Soldier (834) Wetmore (866) Disaggregated KUSF Support Attachment I JBN, Madison, and Pioneer Page 3 of 3 Effective 3/1/2010 (Fiscal Year 14) Zone 1 Zone 2 Company Wire Center Per Month Annual Per Month Annual JBN Fairview (467) Agenda (732) Barnes (763) Coming (868) 3.80 45.59 10.04 9.97 8.79 120.42 119.61 105.43 10.09 8.32 8.55 9.68 8.87 10.84 9.33 9.10 9.27 9.17 8.29 121.13 99.80 102.63 116.10 106.49 130.03 111.97 109.18 111.24 110.05 99.49 Zone 1 Zone 2 Company Wire Center Per Month Annual Per Month Annual Madison Madison 7.04 84.43 93.77 1,125.26 Zone 1 Zone 2 Company Wire Center Per Month Annual Per Month Annual Pioneer Big Bow Coolidge Deerfield 28.28 32.72 30.19 339.39 392.58 362.31 Hugoton 2.63 31.55 Johnson Kendall Lakin Manter Moscow Richfield Rolla Ryus Satanta Syracuse 30.57 27.22 30.90 29.96 26.93 30.24 31.54 31.15 27.79 29.11 366.82 326.68 370.82 359.49 323.19 362.93 378.50 373.81 333.53 349.34 Ulysses 2.81 33.76 4/12/2010